Travel Credit Card: What are they and What One Must Know before Applying for One?

Let’s get the cat out of the bag-travelling is fun but it can be expensive for some. When you have the right credit card like an Amex platinum travel card or travel card, the same travelling which you thought was costly seems less expensive. On the other note, have you thought of getting a travel credit card? Air miles are the first thing that people associate with travel cards however, do you know Travel cards, on the other hand, just like American Express platinum reserve credit card have additional features in this post, we will be exploring the same. You will also get to know what you should know before getting the travel credit card and the important aspects associated with this card. 

What exactly are travel cards?

A travel credit card like Amex platinum travel card is a sort of credit card that is intended primarily for the needs of travellers. A standard credit card offers cashback or points that can be used for gift cards, merchandise, or savings. A travel credit card provides travel-related perks. 

There are co-branded and non-cobranded travel credit cards available in the Indian market. One should understand that co-branded travel credit cards typically offer higher reward points on spends made at partner travel brands, hence, consider using one only if you are loyal to a specific travel brand. Whereas, non-co-branded travel credit cards provide more rewards on travel expenses and more options for earning and redeeming reward points because they are not limited by partner airlines or hotels. These cards provide points or miles that can be exchanged for travel reservations or other travel-related services. As a sign-up bonus, reward points or miles can be received after spending a certain amount of money within a certain time frame. Also, reward points or miles can be earned for spending as well as purchases from airline or hotel partners or certain merchant categories.

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How do I select a Travel Credit Card?

The simplest way to select a card is to contact your current bank. However, first, you need to consider your travel habits before making a selection. 

Examine the joining and annual fees: Unless you choose a no-frills card, most cards charge a joining and annual fee. This is frequently a substantial sum in the case of co-branded or specialty cards. Before you purchase the card, ensure that the fee will be recovered through miles and points. If you spend enough, the rewards you earn make the annual fees well worthwhile.

This implies that before selecting a travel card, think about the amount of spending required to obtain the extra bonus points and the time frame in which you must do it. If it is more than you normally spend or more than you can possibly pay back without carrying a balance, it is better to drop it.

Understand the foreign currency markup cost: When using your credit card such as American Express platinum reserve credit card abroad, you need also to be aware of the foreign currency markup cost, foreign transaction fee, and cash withdrawal charges. A foreign transaction fee ranges from 1.5% to 3.5% of the entire transaction amount. In addition to the regular cash withdrawal fee for your credit card, cash withdrawals can cost you anywhere between 1% and 4%. It makes sense to carry cash or a travel card with lower fees than your American Express platinum reserve credit card. Alternatively, choose a no-fee travel card or a card that rewards you for foreign transactions so that the transaction fee is offset when redeeming those rewards. 

Important Aspects of Travel Credit Cards One must know

While such cards are becoming increasingly popular, it is critical to understand their costs and benefits.

Before applying for one, always conduct a cost-benefit analysis. Evaluate the cost of travel credit cards such as for Amex platinum travel card. After all, they often have high joining and transaction fees. The interest rate charged by travel cards is the same as that charged by American Express platinum reserve credit card. It is normally in the 36-45% range, and unless you choose a no-frills card, you will also have to pay a membership charge as well as an annual cost. This is usually a substantial sum in the case of co-branded or specialized cards. Some companies waive annual fees if you spend more than a certain amount, which varies on every card. Most reward cards have a hefty annual fee. You must earn more in rewards than you spend for the card’s privileges. If you spend enough, the rewards you earn often outweigh the annual fees. So, before you choose it, make sure that the card’s cost is recovered. 

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Also, keep in mind that every time you use your Amex platinum travel card overseas, you will be forced to pay network fees to the bank in the range of 1-2% of the total transaction value. Lenders may also levy a foreign transaction fee. This can range between 1.5 and 3.5% of the total transaction value. Then there’s the foreign currency mark-up fee, which you pay when you make a transaction in a foreign currency. While this may not appear to be much for little transactions, it could amount to thousands of rupees for larger ones.

Avoid using a travel credit card if you have a habit of not repaying your card charges on time. Instead, get a no-fee credit card, use it properly, and then get an Amex platinum travel card once you’ve proven your creditworthiness.

Finally, remember that American Express platinum reserve credit card are no longer utilized as a form of credit. Credit cards are not intended to be used as a source of credit, but rather to provide convenience and rewards. That is only possible if you pay your total owing on time and do not carry over the balance. Lastly, there is no doubt that Amex platinum travel card provide numerous advantages. However, before applying for one, you should evaluate your travel requirements. If you are not a frequent traveller or are not interested in travel incentives, avoid them.